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3 USD, EUR and GBP exchange rate moving developments to watch out for next week

Since receiving the highly-supportive news last week that key federal policymakers such as Janet Yellen are in favour of an ‘early’ US interest rate increase on 28 October or 16 December, the US dollar has been held up by high levels of investor optimism this week.

This has chiefly stemmed from a rise in US Personal Consumption result, the Consumer Confidence Survey score and the employment change in September which saw a 200k person increase.

The UK has had far less consistent data; the Gfk Consumer Confidence Survey score fell from seven points to three, while on the other side of things, the Manufacturing PMI for September only dropped by  -0.1 to 51.5 instead of 51.3.

The euro has had a week to forget, with 29 September’s German CPIs and 30 September’s Eurozone CPIs printing in disheartening negatives, along with the number of German unemployed rising by 2,000 people.

The pound/euro exchange rate closed out last week in the region of 1.35 and has ended in much the same position this week, while the pound/US dollar exchange rate has degraded slightly from 1.51.

So, what should we be looking out for next week?

Pound sterling (GBP) exchange rate fluctuation expected from BoE minutes 

Although the Bank of England (BoE) will be making an interest rate decision next week, no change from 0.50 percent has been predicted for this or any of the other remaining UK rate decisions left in 2015. Instead, all eyes will be on the BoE’s minutes, which are released simultaneously with the actual rate announcement. 

Naturally, the vote is expected to show a majority in favour of a freeze, but any signs of dissent among Monetary Policy Committee (MPC) members over how early to raise rates in 2016 will be something to watch out for. For the past two votes, only one MPC member, Ian McCafferty, has voted for a rise, therefore a 3-6 vote or even 2-7 vote in favour of a rate hike could send the pound soaring against its competitors shortly after the minutes are released. 

Exchange rates can be extremely volatile. Look into registering for regular market updates if you want to stay up-to-date with the latest market movements.

ECB account holds similar potential in store for euro (EUR) exchange rate 

The euro will find itself in a similar position to the pound next week, although in a distinct difference, the euro’s European Central Bank’s (ECB) Account of the Monetary Policy Meeting will not be accompanied with an actual interest rate decision. 

Instead, the account will reflect on the voting process for the previous interest rate decision at the beginning of September and the ECB’s ongoing thought process regarding possible further quantitative easing (QE) in the Eurozone. If previous reactions are anything to go by, any indication from the ECB that further QE measures are being planned, especially after last week’s disappointing run of Eurozone data, will likely send the euro plunging in value.

US dollar (USD) conversion rate could see little movement despite high-importance of fed minutes

As the last part of a hat-trick of central bank minutes, the Federal Reserve minutes from their Federal Open Market Committee (FOMC) meeting on 16-17 September are due for release next week. 

Under ‘normal’ circumstances, any form of release from the Fed regarding its interest rate decisions would trigger major market movement for the US dollar, but as the previous two weeks have featured Fed policymakers overtly stating their optimistic intentions regarding US interest rate decisions in October and December, the somewhat obsolete nature of the minutes may mean that no real change takes place in the US dollar’s exchange rate.

Exchange rate movements can be swift and dramatic, so if you’ve got a currency requirement coming up and want to move your funds at the right time you may want to have a chat with a currency specialist.


Contributed by TorFX


TorFX is a specialist currency broker that offers far better exchange rates than you are likely to receive from a high street bank.